Trump to finalize small business health insurance option

June 18, 2018 - 9:33 pm

WASHINGTON (AP) — The Trump administration is close to finalizing a health insurance option for small firms and self-employed people that would cost less but could cover fewer benefits than current plans, congressional officials and business groups said Monday.

They spoke on condition of anonymity to discuss the pending announcement. The Labor Department scheduled an announcement Tuesday morning.

As originally proposed, the new "association health plans" would have to cover people with pre-existing health conditions. However, they could offer narrower benefits than required under the Obama-era health law.

They could be marketed across state lines to businesses in a common industry — auto repair shops, for example — or they could be sold to self-employed people like musicians.

President Donald Trump has long asserted that promoting the sale of health insurance across state lines can bring down premiums without sacrificing quality. But many experts aren't convinced, because medical costs vary greatly according to geography. Like real estate, health insurance is a local business.

Ultimately, the idea's success depends on buy-in from plan sponsors, consumers, insurers and state regulators. No major consequences are expected for people covered by large employers.

After Republicans hit a dead end trying to repeal the Affordable Care Act, the Trump administration has pushed regulatory actions to loosen ACA requirements and try to lower premiums for individuals and small businesses, which now reflect the cost of comprehensive coverage.

Another major initiative is expected later this summer when the administration eases rules for short-term health plans lasting less than a full year that could be purchased by individuals. Those plans wouldn't have to cover people with pre-existing conditions, but would offer healthy people much lower premiums.

Critics say the administration's approach will draw healthy people away from the Obama health law's insurance markets, raising the cost of coverage, which is subsidized by taxpayers. About 11 million people are covered by HealthCare.gov and state markets, but the administration's priority is to try to lower premiums for another 7 million or so who buy their coverage directly and don't get any help from the government.

"To the extent that these plans develop and serve as a parallel market, that could have a destabilizing effect," said Karen Pollitz of the nonpartisan Kaiser Family Foundation, an expert on individual health insurance. Pollitz also served as a consumer protection regulator in the Obama administration.

"People who think they can get by without those (comprehensive) benefits will look for cheaper premiums," she added.

State insurance regulators are concerned about association health plans because similar plans in the past had problems with financial solvency and even fraud. A key concern about Tuesday's announcement is to what degree state regulators will retain oversight over the Trump administration's new plans.

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